China National Petroleum Warns on Earnings Hit From Low Oil Prices, Coronavirus
Zhang Yushuo
DATE:  Mar 27 2020
/ SOURCE:  yicai
China National Petroleum Warns on Earnings Hit From Low Oil Prices, Coronavirus China National Petroleum Warns on Earnings Hit From Low Oil Prices, Coronavirus

(Yicai Global) March 27 -- China National Petroleum, the country's largest oil and gas supplier, expects weak international crude oil prices and the coronavirus epidemic to dent business this year. Net profit fell 14 percent last year.

Earnings may be negatively affected in 2020, so CNPC may need to make changes to a planned CNY295 billion (USD41.6 billion) in capital expenditure, the Beijing-based company said in an annual earnings report published yesterday. Last year, it boosted capex spending 16 percent to CNY296.8 billion.

Domestic demand for refined oil products and natural gas is softening, while prices for those commodities and crude oil are falling, the state-owned company said. Over the past three months, international oil prices have plunged more than 60 percent, falling below USD30 a barrel. 

Petroleum companies must be prepared to fight a long battle with low prices, Chairman Dai Houliang wrote in the report. But he also pointed out that high prices may not bring high profits much in the same way that low prices don't always equate to low competitiveness.

For the year ended Dec. 31, CNPC's net profit was CNY45.7 billion (USD6.5 billion) due to lackluster petroleum refining and chemical engineering businesses that logged a 69 percent slump in gains because of overcapacity and discounting. Revenue fell 6 percent to CNY2.52 trillion (USD353.4 billion).

Operating profit from oil exploration and production jumped 31 percent to CNY96.1 billion. Crude oil output rose 2 percent to 909 million barrels. Sales of refined oil products rose 5 percent to 188 million tons, while related losses narrowed to CNY565 million (USD79.8 million). Operating profit from its natural gas and pipeline business rose 2 percent to CNY26.1 billion.

Shares of CNPC's listed unit PetroChina [SHA:601857] fell 1.04 percent today to CNY4.74 (67 US cents). PetroChina's Hong Kong-listed shares [HKG:0857] dropped 0.8 percent to HKD2.55 (33 US cents).

Editor: Emmi Laine

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Keywords:   CNPC,Profit,Oil Prices